PA Equine Coalition Urges Opposition to H.B. 808

June 26, 2015

Dear Representative:

It is our understanding that H.B. 808, which would legalize Video Gaming Terminals (VGTs) at thousands of bars and taverns throughout the state, may be brought up for a vote before the House Gaming Oversight Committee this week. The Pennsylvania Equine Coalition strongly urges you to oppose this legislation because of the harmful effect it will have on revenues at existing Category 1 racetrack casinos in Pennsylvania, which will adversely impact the state’s horseracing and breeding industry.

The Pennsylvania Equine Coalition represents the interests of more than 10,000 horse owners, trainers, drivers, and breeders in Pennsylvania’s racing and breeding industry. Gross terminal revenue from slot machine play at racetrack casinos in the state provide the bulk of funding for the racing purses and breeders incentives in Pennsylvania through the Race Horse Development Fund. This fund is the lifeblood of our industry, and makes it possible for our members to preserve tens of thousands of acres of open space, create jobs, and serve as an economic driver for the Commonwealth’s larger agricultural economy.

The introduction of Video Gaming Terminals to thousands of bars and taverns across the state will have a seismic effect on the gaming industry in Pennsylvania. H.B. 808 will drastically reduce the level of gaming revenue brought in by existing brick and mortar casinos in Pennsylvania, which will result in a significant decrease in funding for the Race Horse Development Fund. That in turn will result in decreased purses and breeder incentives, prompting horse owners and breeders to move to other states, resulting in the loss of preserved open space, less spending on feed and supplies from Pennsylvania farmers, and the loss of jobs.

The State of Illinois legalized Video Gaming Terminals at non-casino locations in 2009 and offers a cautionary tale for Pennsylvania policymakers. Data from the Illinois Gaming Board shows that among the nine Illinois casinos that existed in FY2010, revenues have fallen a collective 24 percent, from $1.4 billion to $1.06 billion.

In January, one of those casinos — Casino Queen in St. Louis — announced it was laying off additional workers and cutting its hours of operation. When Casino Queen opened its doors in 2007, it had 1,200 casino employees. Today, it has just 600 casino employees, half the amount it did in 2007 due to revenue losses stemming largely from increased competition of VGTs. Similarly, the Grand Victoria Casino in Elgin, Illinois has seen its annual receipts fall from $286 million to $180 million between 2010 and 2014, a decrease of $106 million or more than 37 percent. That decrease is forcing the City of Elgin, which receives 5 percent of the gaming revenue from the casino, to make significant cuts. Similar issues are playing out across Illinois other casinos and the communities where they are located.

Gross terminal revenues from slots at Pennsylvania’s Category 1 casinos are already declining year over year due to increased competition from table games, the introduction of new Category 2 casinos, and competition from other states. Those declines are resulting in decreased revenue for the Race Horse Development Fund and our industry. If gross terminal revenues were to fall an additional 24 percent as it did in Illinois with the introduction of VGTs, it would decimate the state’s horse racing and breeding industry. We would be unable to compete with the purse structure and incentives offered by other nearby states, resulting in lost jobs and a staggering blow to the state’s agricultural economy.

For these reasons, the Pennsylvania Equine Coalition strongly urges members of the House Gaming Oversight Committee to oppose H.B. 808.